Preferred stock to municipal bond

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1) An investor is in a 25% combined federal plus state tax bracket. If corporate bonds offer 9% yields, what must municipals offer for the investor to prefer them to corporate bonds?

2). Continue with the investor in previous question. Now let's assume that the investor is not an individual investor but a corporate level investor who can have tax-exempt of 70% in preferred stock. With the expected change of the price of ABC stock during the period is zero and initial investment of $100, How much of a dividend should be given to the investor to prefer preferred stock to municipal bond?

Reference no: EM132868572

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